Notes Receivable - Ia 1

Chapter 5
Notes Receivable
1. Present value is
a. the value now of a future amount.
b. the amount that must be invested now to produce a known future value.
c. always smaller than the future value.
d. all of these.
2. Which of the following factors would show the largest value for an interest rate of 12% for six
periods?
a. Present value of 1
b. Present value of an ordinary annuity of 1
c. Present value of an annuity due of 1
d. Answer cannot be determined
3. A higher interest rate results to

a. increased amount of present value.
b. decreased amount of present value.
c. same amount of present value.
d. Answer cannot be determined due to insufficient data
4. A shorter period results to

a. increased amount of present value.
b. decreased amount of present value.
c. same amount of present value.
d. shorter accountant.
5. The present value of 1 for a period of zero equals

a. 1.
b. 0.
c. Error!
d. Answer depends on the interest rate
6. An entity sells goods either on cash basis or on 6-month installment basis. On January 1, 20x1,
goods with cash price of ₱50,000 were sold at an installment price of ₱75,000. Which of the
following statements is correct?
a. Net receivable of ₱75,000 is recognized on the date of sale.
b. Net receivable of ₱50,000 is recognized upon full payment of the total price.
c. The ₱20,000 difference between the cash price and installment price is recognized as interest
income on the date of sale.
d. Net receivable of ₱50,000 is recognized on the date of sale.
7. An entity sells goods for ₱150,000 to a customer who was granted a special credit period of 1
year. The entity normally sells the goods for ₱120,000 with a credit period of one month or with
a ₱10,000 discount for outright payment in cash. How much is the initial measurement of the
receivable if the entity does not use the practical expedient allowed under PFRS 15?
a. 150,000
b. 130,000
c. 120,000
d. 110,000
Use the following information for the next two questions:

On January 1, 20x1, ABC Co. sold a transportation equipment with a historical cost of ₱1,000,000 and
accumulated depreciation of ₱300,000 in exchange for cash of ₱100,000 and a noninterest-bearing
note receivable of ₱800,000 due on January 1, 20x4. The prevailing rate of interest for this type of
note is 12%.
8. How much is the interest income in 20x1?

a. 68,331
b. 76,532
c. 85,714
d. 96,000
9. How much is the carrying amount of the receivable on December 31, 20x2?
a. 800,000
b. 569,424
c. 637,755
d. 714,286
Use the following information for the next three questions:

On January 1, 20x1, Mojo Co. sold transportation equipment with a historical cost of ₱20,000,000 and
accumulated depreciation of ₱7,000,000 in exchange for cash of ₱500,000 and a noninterest-bearing
note receivable of ₱8,000,000 due in 4 equal annual installments starting on December 31, 20x1 and
every December 31 thereafter. The prevailing rate of interest for this type of note is 12%.

a. 728,946
b. 678,334
c. 728,964
d. 704,236
11. How much is the current portion of the receivable on December 31, 20x1?
a. 1,271,036
b. 1,423,560
c. 3,380,102
d. 1,594,388
a. 4,803,663
b. 3,380,103
c. 6,074,699
d. 6,000,000
Use the following information for the next three questions:
On January 1, 20x1, ABC Co. sold transportation equipment with a historical cost of ₱12,000,000 and
accumulated depreciation of ₱7,000,000 in exchange for cash of ₱100,000 and a noninterest-bearing
note receivable of ₱4,000,000 due in 4 equal annual installments starting on January 1, 20x1 and
every January 1 thereafter. The prevailing rate of interest for this type of note is 12%.

a. 408,230
b. 278,334
c. 328,964
d. 288,220
a. 1,690,510
b. 892,857
c. 2,690,051
d. 1,594,388
15. How much is the carrying amount of the receivable on January 1, 20x3?
a. 892,857
b. 3,380,102
c. 6,074,699
d. 6,000,000

On January 1, 20x1, ABC Co. sold machinery with historical cost of ₱3,000,000 and accumulated
depreciation of ₱900,000 in exchange for a 3-year, ₱2,100,000 noninterest-bearing note receivable due
in equal semi-annual payments every July 1 and December 31 starting on July 1, 20x1. The
prevailing rate of interest for this type of note is 10%.

a. 88,825
b. 177,649
c. 128,964
d. 164,591
a. 1,241,083
b. 982,378
c. 1,690,051
d. 1,594,388
18. On January 1, 20x1, ABC Co. sold machinery costing ₱3,000,000 with accumulated depreciation
of ₱1,100,000 in exchange for a 3-year, ₱900,000 noninterest-bearing note receivable due as
follows:
Date Amount of installment
December 31, 20x1 400,000
December 31, 20x2 300,000
December 31, 20x3 200,000
Total 900,000
The prevailing rate of interest for this type of note is 10%. How much is the carrying amount of
the receivable on December 31, 20x1?
a. 467,354
b. 438,016
c. 376,345
d. 428,346

On January 1, 20x1, ABC Co. sold inventory costing ₱1,800,000 with a list price of ₱2,200,000 and a
cash price of ₱2,000,000 in exchange for a ₱2,400,000 noninterest-bearing note due on December 31,
20x3.
19. How much is the initial measurement of the receivable?

a. 1,800,000
b. 2,200,000
c. 2,000,000
d. 2,400,000
a. 2,125,390
b. 2,135,341
c. 2,098,343
d. 2,000,000
“Not only so, but we also glory in our sufferings, because we know that suffering produces perseverance;” (Romans
5:3)
-END

Notes Receivable - Ia 1

Uploaded by

Copyright:

Available Formats

Notes Receivable - Ia 1

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Notes Receivable - Ia 1

Uploaded by

Copyright:

Available Formats

Chapter 5

3. A higher interest rate results to

4. A shorter period results to

5. The present value of 1 for a period of zero equals

Use the following information for the next two questions:

8. How much is the interest income in 20x1?

Use the following information for the next three questions:

10. How much is the interest income in 20x1?

13. How much is the interest income in 20x1?

Use the following information for the next two questions:

16. How much is the interest income in 20x1?

Use the following information for the next two questions:

19. How much is the initial measurement of the receivable?

You might also like